Persons who travel to another country than their country of residence may have the right to a refund of so-called value-added tax when they purchase goods or services abroad. This type of tax is found in many countries and the rate of tax can vary in different countries. In Europe the tax rate for most countries is over 10%. For example, the United Kingdom has so-called VAT (Value-added Tax) at 17.5% on most articles. In Sweden and Denmark this tax is as much as 25% but is somewhat lower for certain goods and services. In Canada this tax on goods and services is 7% and certain provinces have a supplement for provincial taxes. In the USA most states have regional taxes in the order of 1-10%.
With the purpose of stimulating exports, these value-added taxes can in many countries be refunded to persons who are resident outside the country. A condition for this is that purchased goods are exported and used outside the country. In some countries, such as Canada, a refund of value-added tax can be obtained for tax on things other than goods, such as tax on hotel rooms.
Hitherto, it has been very complicated for tourists and other visitors to a foreign country with value-added tax to obtain a refund of this tax. Ways of carrying out the refund vary between different countries. In some countries, visitors are allowed to apply for a refund when they leave the country, for example in transit areas at airports or near borders. However, the visitor must gather receipts and decide which purchases are entitled to a refund. The visitor must also complete forms in foreign languages, which forms must be checked by customs officials at the same time as the purchases must be presented. The visitor must therefore queue at a refund counter and there receive the refund often in the currency of the country in question, which in turn means that the visitor must later stand in an exchange queue in order to receive his refund in the desired currency.
One example of a process for refunding value-added tax is practised in Canada. According to this process, a person who has visited the country must post from outside the country a refund form together with original receipts for all purchases. Thereafter, it takes at least six weeks before the Canadian agent handles the case and sends the refund. The refund is paid in Canadian dollars and therefore when the visitor receives the cheque, he must also change it to the currency of his own country.
Another way of refunding value-added tax (VAT) is practised in the United Kingdom. For each purchase for which a refund is possible, the visitor must prove his right to a refund by presenting his passport to the sales assistant. Certain retailers may also demand a minimum purchase before a refund can be received. Visitors must then in the shop complete a special refund form which is supplied by the retailer.
When the visitor leaves the European Community, all refund forms and corresponding goods must be presented to a customs official and the visitor receives a customs stamp on the above-mentioned form. If the visitor neglects to certify the refund form at the customs, he may lose the opportunity of receiving a refund later.
In many cases, goods have already been checked in and the customs official can approve the documents even if all the goods cannot be presented.
Once outside the European Community, the visitor must post a customs-stamped refund form to each shop where the person made a purchase. The retailer will then deduct a fee and send a cheque in Euros for the remaining amount to the customer, who then can change it to a currency that can be used in his homeland.
Other countries have other special rules that must be fulfilled in order to obtain a refund of value-added tax.
As can be seen from the above, it is possible for individuals to receive a refund of value-added tax which has been paid on purchasing goods in foreign countries. However, as has been seen, this is extremely complicated for certain countries. Furthermore, the rules vary, which makes it considerably more difficult for persons visiting several countries during a trip.
The purpose of enabling value-added tax to be refunded to people who are resident in another country is of course to try to stimulate export of goods. With the aim of preventing tax fraud, different countries have chosen, as has been exemplified above, to introduce different rules which must be met in order to allow foreign visitors to receive refunds of value-added tax.
There exist service companies, which have set up businesses to enable easier handling of refunds of value-added tax for both tourists and shops. In shops which are collaborating with these service companies, tourists are given refund forms which have to be completed with certain personal details. Goods and forms are presented at customs and forms are provided with the requisite customs stamp. The above-mentioned companies have service points at international airports and at border stations where tourists can obtain their refund directly in the desired currency. The company then takes care of all paperwork and bills the shops.
If a customer forgets or does not have time to visit the above-mentioned service points for refunding value-added tax, the customer can also send the requisite documents to the service company afterwards. The service company can then, with the aid of the documents, deposit the tax refund in the customer's bank account or the like.
These service companies considerably simplify the procedure for tourists and doubtless considerably stimulate sales for the participating shops.
However, there is a need for further simplification for both shop-owners and tourists.
There is still a great deal of time-consuming paperwork for the shops, which, for each new customer who is perceived to be a tourist or states himself to be a tourist, must furnish refund forms and in addition must explain to the tourist how to fill them in. This time-consuming practice reduces the flow of paying customers through the shop and there is a great need to simplify the routines and reduce the paperwork.
It is still complicated for the tourists because they have to complete a new form in each new shop. Furthermore, they must keep all the receipts in order to be able to obtain a refund of value-added tax.
WO 00/42546 suggests a system for simplifying the refunding of value-added tax. The said system comprises an advanced transaction card, which is intended to cooperate with card terminals to execute the purchase transaction and generate transaction data. An application for a tax refund is stored directly on the transaction card, which is arranged to calculate the tax refund corresponding to the entered purchase data. However, the system suggested in WO 00/42546 is not realistic because it does not take into account the requirements of different countries for checking of transactions regarding refunding of tax. Essential data, such as the cardholder's passport number and home address, is also difficult to store on the transaction card since these details must be able to be changed, for example if the card holder changes his home address. For the individual consumer it is regarded to be inconvenient to have yet another “credit card” to look after and carry with one on trips abroad.
In WO 01/31572 is described a system and a method concerning how companies can manage their obligation to show their account of value-added tax (VAT) to the tax-authority of the country. This is however something that is completely different from the measures required for handling refund of VAT to a tourist who has purchased goods in another country than his country of residence. A tourist receives this refund via the shop with the assistance of a service company and first after the tourist has been able to prove his right to refund and further first after he has exported the goods and this export has been confirmed by custom control and a tax refund form has been duly stamped by a custom inspector. A tourist has no obligation to show account to tax-authority of the country where the goods is purchased. Instead it is the shop that sells the goods that has an obligation to show account for VAT.
U.S. Pat. No. 5,903,876 describes a method which necessitates the use of a new “VAT CARD” or alternatively a new “COMBINED VAT CREDIT CARD”, i.e. a user must apply for a new card and then have a further permanent card to keep in order in addition to his other payment cards or credit cards. U.S. Pat. No. 5,903,876 does not describe a realistic method as it presupposes that authorities in different countries accept refund of VAT without performing a custom check. In the method described in D1 it is not checked whether the goods are exported or not.
GB 2 251100 A describes a system related to refund of VAT. GB 2 251100 A is however very scanty with regards to the function of the system. The described system is very complicated and time demanding for the customer. When making a purchase in a shop the customer gets a receipt or a so called “entry on a delivery docket”. When the customer has done his purchases in a shop the customer must then go to a specific export stand situated somewhere in the shop. At this export stand there is a data terminal with a printer, which equipment, after the customer has shown the receipts or said “entries”, are arranged on basis of the information from said receipts or entries print out a “multi-part form”. One part of this “form” is kept by the customer as a verification while a second part is intended to be shown at custom check together with purchased goods and must be provided with custom stamp to enable the customer to get refund of VAT at a service company (“tax-accountable organisation”) with office in connection with the custom check, for instance in an air-port. The remaining parts from said “multi-part form” are required for accounting and audit purposes.” A serial number which identifies each receipt and “entry” and also identifies the shop is added to said data terminal. It should also be noted that not the whole transaction but only data “relating” to transactions are recorded in the central database.
The forms which are carried by the customers are stamped in custom and these stamped forms are provided with indexes and are stored in order to be able to make account for the tax authority. According to GB 2 251100 A it is the paper forms that are stored.
As is evident from the above, there is a great need, from the point of view of both retailers and consumers, to improve the present system for refunding value-added tax to tourists.